1. California Contract Cities Association31st Annual Fall SeminarOctober 2011 Continuing Disclosure: Why issuers should be concerned.

2. Tax Exempt Municipal Bonds: $2.4 Trillion Industry “Full and Fair Disclosure insures the integrity of the Municipal Securities Market”

4. Requires Disclosure & Registration—Prior to Sale

5. Prohibits Fraud

6. Protects Investors

7. Applies to Big Corporate Issuers

9. Formed and Empowered the SEC—to monitor, regulate, set policy and enforce securities laws

11. TOWER AMENDMENT—no oversight of municipal bonds by SEC or MSRB

12. MSRB Rules Do Not apply to Issuers—only to Brokers, Dealers and Banks

14. Inadequate Disclosure of their $2 Billion underfunded Pension Fund

15. City Officials Sanctioned:

16. City Manager

17. City Treasurer

18. Auditor Comptroller

19. Deputy City Manager of Finance

20. Assistant Auditor & Comptroller

22. Remediation Actions: outside auditors and conduct two annual follow-up reviews

24. State failed to exercise “reasonable care” in preparing its bond offering documents

27. Cities are being held more accountable

28. Must implement sufficient processes for updating disclosure

29. Must educate public officials, administrators and staff about their role in disclosure obligations re material facts and developments

30. Must explain the “overall financial condition” of the issuer

31. Elected City Officials must adopt and articulate written policy decisions

32. Investors must understand the full financial impact—a very difficult

34. Annual Financial Information

35. Material Events…within a reasonable time…

36. Principal and Interest Payment Delinquencies

37. Unscheduled Draws on debt reserves

38. Unscheduled Draws on Credit Enhancements

39. Substitution of Credit or Liquidity Providers

40. Adverse Tax Opinions

41. Defeasances

42. Rating Changes

43. Non Payment related defaults

44. Modifications to Rights of Security Holders

45. Bond Calls

47. Additional Events

48. Receipt by notices by the IRS re proposed of final determinations of taxability or tax status of security…

49. Tender Offers

50. Bankruptcy, insolvency, receivership…

51. Merger, Consolidation, or Acquisition re Issuer…or sale of substantially all of its assets

53. U/W may rely on specific issuer certifications as to whether Events have occurred, but NOT as to whether Events are material

54. Issuer must remedy disclosure deficiencies—

56. Dodd – Frank Wall Street Reform & Consumer Protection Act (August 2010)

57. Coordinate with SEC and MSRB for rulemaking and enforcement actions

58. More oversight

59. Continuing Obligation for Education of Municipal Advisors and Issuers

60. Bill: U.S. Comptroller to conduct two (2) years study re Disclosure and Report to U. S. Senate Committee on Banking

62. Annual Report

63. Events (whether material or not)

64. Default Remedy: Writ of Mandate or Specific Performance…not deemed a Default on the bonds

65. Indemnity Provisions—for Dissemination Agent, officers, directors, employees and agents…Disclosure Counsel Opinion—examined originals or certified copies of bond documents…bonds are exempt…not undertaken to determine independently or assume any responsibility for the accuracy of disclosure docs…we have had discussions with Issuer and U/W and no reason to believe information misleading… We offer no guarantee…

67. Train City Officials, Administrators and Staff

68. Focus on the “Big Picture” facing the issuer

69. Disclose the good, bad and ugly

70. Hire skilled professional

71. Take affirmative steps to avoid what happened in S.D. and N.J.